When comparing different blockchains, billionaire Mark Cuban examines some specific characteristics before investing.
“Most people pay attention to speed and cost compared to BTC [bitcoin] or ETH [ethereum]”Cuban says CNBC Make It.” While these things can be important, I see blockchains as networks of development platforms through smart contracts. ”
Cuban refers to the capabilities of any blockchain beyond the speed and cost of cryptocurrency transactions. Each blockchain, which is a decentralized digital ledger that documents cryptocurrency transactions and other information, is unique.
For example, the Ethereum blockchain can run smart contracts that support decentralized applications like DeFi or decentralized finance, as well as NFTs or non-fungible tokens. The Ethereum blockchain has its cryptocurrency ether, but it can also serve as a platform for other digital coins.
These aspects of Ethereum appeal to Cubans, he said earlier. Because of his smart contracts, he compares this blockchain to the internet, as various platforms, from DeFi to social media sites, can be built on it.
Other experts agree. “Ether [is] Looking for ways to become a fully functional infrastructure platform, BK Asset Management’s Kathy Lien recently told CNBC Electronic Money System.
Because of this, according to Cuban, “the platforms that have the most active developers and create applications with significant utility to their users have a network effect.” The blockchain, in turn, could “generate substantial fees” that could finance the network and make it investable.
In order to mint a token – such as an NFT – or to check the blockchain and carry out transactions on the blockchain, a user is usually charged a fee by the miners of the blockchain. These fees can be particularly costly during periods of high demand or congestion.
According to Cuban opinion “depending on how the fees are distributed, [it can] Create a real source of income that increases the value of the tokens they mint, ”he says.
For example, Ethereum collects gas fees. That “makes it an income-generating asset that should rise in value as its network expands,” says Lien.
Although some people think that blockchains are only used for cryptocurrency transactions, the platforms could potentially be used for a lot more than what the Ethereum is. For this reason, before investing, Cuban examines the possible use cases for each blockchain, rather than just the speed and cost of using it.
Cuban has invested in many blockchain companies this year, all of which focus on smart contract functions. Its portfolio includes NFT platforms, DeFi companies and Ethereum scaling solutions.
Cuban has also invested in cryptocurrencies like Ethereum, Bitcoin, and others.
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